Regulatory Alerts2026-08-20
Added
Implementation guidance on Banking (Capital) Rules Annex 1: Chapter III - STC approach
This document provides implementation guidance for Authorized Institutions (AIs) on Chapter III of the Banking (Capital) Rules (BCR), focusing on the STC approach. It clarifies due diligence requirements under §54C(1) and §54C(2), mandating AIs to conduct their own annual credit assessments and integrate climate-related financial risks on a best-effort basis, while exempting immaterial exposures like utility deposits. The guidance also details conditions for eligible covered bonds under §59D, including specific asset types, a 10% overcollateralization requirement, and semi-annual information disclosure to investing AIs. Furthermore, it specifies how AIs should assess bank exposures under the Standardized Credit Risk Assessment (SCRA) approach, clarifying assessment frequency and risk-weight application for unrated exposures to banks under §59C(3), where a sovereign's 100% risk-weight can lead to a 150% risk-weight for a grade B bank.